Restrictions on imports of laptops and other electronic device
Marking a sudden and sharp shift in India’s foreign trade policy, the Commerce and Industry Ministry on August 3 notified restrictions on imports of laptops, personal computers (PCs), tablets and servers.
Making it compulsory for importers to secure a licence.
Reasons for import restrictions
The government sought to suggest this was primarily driven by security concerns — imported devices could be used for surveillance, just as mobile phones could have spyware.
The import causing security fears because many come from China
Concerns and impacts on economy
With immediate effect, rattle the entire supply chain (including shipments in transit) and igniting fears of shortages and price surges, especially ahead of the festive season.
It was also a rather blunt nudge for IT hardware producers to set up manufacturing bases in India by tapping a production-linked incentive scheme which has found few takers.
But complex PC component value chains cannot crop up overnight.
Concerns also flared up about how this may hit India’s software and IT-enabled services export prowess.
Sensing a backlash, the government went into damage control, deferring the curbs till November 1 and promising expeditious approvals to licence requests.
Even if import licences will be issued in minutes, as indicated, the entire spectacle is a hark back to the early days of India’s IT industry that was gradually freed up through the 1970s and 1980s.
Industry players are likely to remain on edge till the licensing criteria become clear.
Concerns about – Would importers need to justify imports of cutting-edge devices, or a software firm need to submit proof of new hires or fresh export orders to secure licences?
If PC and tablet imports are causing security fears because many come from China, the government can mandate testing norms to verify shipments.
If the intent is to spur investments, it is difficult to bully global majors into committing large outlays.
They have other “easier to do business” alternatives around the world.
Any increase in costs or limitations on device options would also imply collateral damage for India’s consumers.
For many households and small enterprises, this is not just about crossing the digital divide but also access to government services increasingly going online in a Digital India.
Unpredictable policies, excessive taxation and a return to maximum government, can derail India’s reform story.
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